8 November 2017

Zimbabwe: Forex Shortages Impact Power Imports

Zimbabwe's power imports are under threat as the country continues to struggle to pay its obligations due to acute shortages of foreign currency, sources familiar with the development have said. The country imports an average of 300 megawatts mainly from South Africa's Eskom and Mozambique to augment local supplies but it is in arrears of close to $50 million.

Sources told The Herald Business this week that frantic efforts were being made to reduce the arrears after Eskom threatened to cut supplies at the end of last month.

"The situation is dire," said one source within the Ministry of Energy and Power Development. Eskom had threatened to cut the supplies at the end of last month but a commitment was made to immediately pay at least $10 million this week to avoid disruptions. Early this week, a payment of $3 million was paid and the remainder would be paid later."

Eskom is owed about $40 million while the country is in arrears of $8 million to HCB of Mozambique. No official comment could be obtained from the ministry at the time of going to print. Zesa chief executive Engineer Josh Chifamba was not immediately available for a comment. Zesa is supposed to receive $5 million weekly from the RBZ to import power but the acute foreign currency shortages have seen the central bank struggling to provide enough allocations.

Eskom has frequently threatened to switch off ZESA over its failure to clear the arrears. Power imports rose 260 percent last year. The country imported 2 600 gigawatt hours of power up from 626,4 GWh purchased in 2015. The value of imports increased to $220 million from about $40,6 million a year earlier. Zimbabwe requires an average of 1 400 megawatts against an average generation of 1 000MW.

Zesa is expected to commission the first power generating unit under the $533 million Kariba South extension project next month and this would ease pressure on Zesa to import power. The new units at Kariba power plant are expected to start delivering 150MW onto the grid in December, with an additional same amount of power expected three months later.

Zimbabwe has not invested in major power projects since completing the 920MW Hwange thermal power plant, which now experiences frequent break downs and produces way below its capacity. Further, an additional 300MW will mean consistent or guaranteed supply to substitute a similar amount of power being imported to bridge the deficit.

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